With over 250 megawatts producing enough power for about 31,000 homes, Arizona has installed more rooftop solar than almost any other state. Residents of this sunny state see solar power as a no-brainer. They’re reducing their utility bills and investing in a competitive local solar industry in one fell swoop.
But not everyone is happy with so many Arizonans going solar. The state’s largest utility, Arizona Public Service (APS), is currently working to slow down rooftop solar growth by rolling back its net metering policy.
Arizona’s rooftop solar growth can largely be attributed to the state’s ‘Grade A’ net metering policy. This wonky-but-critical policy ensures that Arizona’s renewable energy customers receive fair credit on their utility bills for excess clean power they deliver to the grid. It is one of the most important state policies for clearing the way for customer investment in solar. And it’s becoming even more important as other market-building solar programs wind down.
The solar industry projects that the price of rooftop solar energy in Arizona will hit the elusive ‘grid parity’ mark in 2013, just as utility incentive programs for rooftop solar are set to end. As long as net metering is kept intact, Arizona’s rooftop solar adoption will continue apace without incentives (see Figure 1).
Figure 1. Arizona solar growth trends
But continued rooftop solar adoption is not what the utilities want to see, and so the net metering rollback efforts have begun in earnest.
In November of 2012, APS proclaimed in comments to the Arizona Corporation Commission (ACC) that net metering is a subsidy rather than simply a compensation program that offers solar customers fair credit for their valuable excess power.
APS’s unsubstantiated claim about the costs of its net metering program is clearly at odds with its own analysis of the benefits of distributed energy completed by consultant RW Beck in 2009. That year-long analysis found that rooftop solar resources provided real economic value to APS ranging from 7.91¢ to 14.11¢ per kWh. Compare those figures with residential electricity rates of about 11.6¢, and commercial rates of about 10.6¢. Turns out that retail net metering was doing its job: fairly compensating APS customers for the value of their excess solar power.
APS argued to the ACC that the RW Beck study was ‘completely outdated,’ so Vote Solar and other stakeholders urged the ACC to undertake a new cost- benefit study, like we did in California. The ACC agreed to a new study, but instead of overseeing the process at the Commission, the utility was given the reins to control the study process.
In February, APS convened a series of technical meetings to allow stakeholders to review the APS commissioned and controlled cost-benefit study. As part of the most recent workshop, APS’s consultant SAIC (which had acquired RW Beck a few years ago) presented its updated findings. According to APS, they had followed the same general methods used in the original 2009 study. However – not surprisingly – the results were far less favorable than the earlier study. SAIC found that the bottom line value of the expected solar PV installed on homes and businesses for APS is 8.2¢ per kilowatt-hour in 2025. Discounted to today, the alleged value to APS is only 3.5¢.
This pittance is a far cry from the findings of similar studies performed outside of Arizona, which ranged from 12.8¢ (Austin Energy, Texas) to 19.3¢ (California) and higher to 25-32¢ (New Jersey and Pennsylvania).
There are a number of areas in the SAIC analysis that are ripe for debate, and Vote Solar will be fighting for rooftop solar’s many benefits to be fairly valued during the remainder of the technical conference process and in the subsequent Commission docket.
The more we engage in dockets across the country to determine if net metering is a ‘fair’ credit mechanism for that power – we become convinced that net metering is not a ‘cost-shift,’ it is a ‘cost-gift.’ Net metering benefits solar and non-solar customers alike. First and foremost, it encourages private investment in valuable mid-day power generation – that reduces the need for the utilities to invest in expensive power infrastructure. Studies in California and elsewhere have shown that these ratepayer benefits actually outweigh the utilities’ lost revenues from those customers buying less energy from the utility.
That’s before adding up the many environmental and economic benefits of a robust rooftop solar market: 119,000 jobs in communities across the country, $6B in economic activity last year, 3.9 GW of clean, local solar power that’s literally saving lives by reducing harmful emissions and offering hope in the fight against climate change. Let’s put a price tag on that!